Green Tax Break Syndicated Easements Face IRS Scrutiny

Jack Fisher has raised hundreds of millions of dollars pitching investors on real estate development projects that were never built. Fisher, an accountant-turned-developer, promoted projects such as the Preserve at Venice Harbor, near Hilton Head, S.C., where marketing illustrations showed houses on canals that evoked the famous Italian city. Instead of developing the land, he recruited investors to elaborate deals that provided them charitable tax deductions in return for donating easements for conservation.

The Internal Revenue Service, however, suspects the deals may amount to tax fraud. Fisher is at the center of a criminal probe related to these syndicated conservation easements, according to people familiar with the details, who requested anonymity to discuss a confidential matter. The investigation has already led to tax conspiracy charges against three accountants who worked with him.

A syndicated conservation easement gives dozens of investors in partnerships three choices: to build a specific development project; to hold on to the land and build later; or to donate an easement to a land trust or government, promising to forgo development. The third option entitles investors to charitable tax deductions, based on the appraised value of the land, that can be worth four or five times their investment.

Easements have been used—legitimately, and mostly by family partnerships and individuals like farmers—for decades as part of a federal push to preserve more than 30 million acres of land. Those aren’t the focus of an IRS crackdown. Instead, it’s going after promoters like Fisher who sell deals through brokers, accountants, lawyers, and tax preparers, and who market the projects that generate large tax deductions. The IRS has made these an enforcement priority, suing some promoters to shut them down and criminally investigating others.

California conservation lawyer Misti Schmidt says a typical syndicated easement used by wealthy investors is an “ugly tax-shelter scheme” that relies on grossly overvalued appraisals. “There’s so much money to be made, they just keep doing it,” says Schmidt, a partner at Conservation Partners.

Those appraisals are at the center of the legal fight around syndicated easements. Before an easement donation is made, an appraiser assigns it a value based on its highest and best use. That number is then used to calculate the tax deductions. The IRS often argues that those appraisals vastly inflate the development potential of a property, and that promoters use those valuations to market lucrative tax deductions.

Two of Fisher’s associates, the brothers Stein and Corey Agee, pleaded guilty in December to conspiring to promote fraudulent tax breaks and are cooperating with prosecutors. Although Fisher wasn’t charged or named in the Agee cases, he’s referred to as Promoter A in court documents, the people familiar with the details say. Documents reviewed by Bloomberg confirm Fisher’s role in the deals. Lawyers for Fisher didn’t respond to emails and phone calls seeking comment.

In the Stein Agee case, prosecutors say the deals were “illegal tax shelters that allowed taxpayers to buy tax deductions,” according to the charges. Appraisals were “falsely inflated,” while the conservation option was “always a foregone conclusion.” Many investors signed up after the tax year in which easements were donated, prosecutors say, even though the IRS allows deductions only in the same year a donation is made. Promoter A and others had investors backdate checks and agreements, according to the charges.

“Promoter A’s tax shelters resulted in a massive evasion of taxes,” the charges state. In all, more than 1,500 investors received $1.2 billion in fraudulent tax deductions, prosecutors said. At one point, Promoter A told Stein Agee that he met with several co-conspirators to make sure they were on the “same page” about late investments, according to the charges. Promoter A proposed that Agee could falsely suggest that backdated checks weren’t deposited because they were “lost” on someone’s desk. Lawyers for the Agees declined to comment.

Nationwide, the IRS has challenged $21 billion in tax deductions claimed for syndicated easements from 2016 to 2018, saying it’s auditing 28,000 taxpayers. Former President Donald Trump has donated several easements, including two under scrutiny by New York state authorities.

“The IRS fully supports the benefit of legitimate conservation easements around this country,” IRS Commissioner Charles Rettig told Congress in March. “It has done tremendous things for farmers and others. Our problem is with the abusive syndicated easements.”

The IRS crackdown comes amid a battle in Congress that pits conservation groups and national appraisal organizations against promoters of syndicated easements. Conservation groups want legislation that would bar investors from claiming deductions worth more than two and a half times their initial investment. Promoters have been blocking that fix for years.

“The IRS’s current take-no-prisoners litigation strategy is also going after minor technical flaws that arise in all easements, not just syndications,” says Schmidt, the conservation lawyer. “Legitimate easements are now getting disallowed.”

Fisher, who’s in his late 60s, grew up on a small-town farm in Marshall, N.C., and still speaks in a soft Southern drawl. The son of a truck driver and homemaker, he graduated with a degree in accounting from nearby Mars Hill College in 1974 before joining the IRS. Fisher then became a certified public accountant, worked for Price Waterhouse, and joined a firm that moved him to Atlanta to work with the National Football League’s Falcons.

Later, he took a job at an accounting firm with the Agee brothers’ father, Edward Agee. “I got a lot of good experience,” Fisher testified at a trial after a real estate broker sued him, claiming the developer owed him a commission. Fisher said he met people who “could refer you to business: bankers and things like that.”

He got into development by auditing construction companies, and later began assembling his own investment deals, founding Preserve Communities about two decades ago.

Fisher was adept at raising money, says Anthony Antonino, a real estate consultant who helped with the sale of 800 acres in North Carolina for $14.75 million to entities controlled by Fisher and a wealthy investor. “Jack knows where the money’s at, and he knows how to get it,” Antonino says.

Some of Fisher’s wealthy investors were involved in equestrian events, say people familiar with the matter. His family owned a 40-acre show stable in Alpharetta, Ga., according to a 2013 story in the Atlanta Journal-Constitution. His then-wife, Libba, and two of their children won several titles competing in elite hunter and jumper events, according to records maintained by the U.S. Equestrian Federation.

He was a hands-on developer, says Mark Brooks, a civil engineer who helped Fisher build projects. “He was out there walking the roads and figuring out site lots,” Brooks says. “He was real proud when he did the developments. He felt he was doing things to help out Madison County, which was a pretty poor county.”

He also branched out to the Western U.S., buying a 1,088-acre ranch near Reno, Nev. In late 2018 a Georgia corporation Fisher formed donated an easement covering 812 acres to the North American Land Trust. Investors got $51.2 million in deductions, according to court filings. They put up $10 million, his partner told planners in Nevada’s Washoe County.

Months later, Fisher pursued permission to develop 38 homes on land not covered by the easement. He showed up at a rural advisory board meeting in July 2019 wearing a cowboy hat and flanked by ranch hands, according to a resident. When pressed, Fisher backed down.

“We have no plans to do anything with that property other than to make it part of the ranch,” Fisher said at the recorded meeting. In the face of stated opposition by planners, he withdrew his application.

The Agee brothers, whose father died in 2009, helped promote some of Fisher’s deals. At the proposed Preserve at Venice Harbor development, $179.8 million in tax deductions were claimed by the 390 investors who chose a conservation easement instead of building homes, court documents show. That was more than four times what they put in.

By 2018, less than two years after the IRS began targeting syndicated easements as tax shelters, Fisher was under investigation, the people with knowledge of the matter say. “You have to be very, very careful that these look like real estate investments as compared to, you know, basically a tax shelter,” Promoter A told an agent posing as an investor, according to the charges against Stein Agee.

Fisher continued to work with the Agees through last year, the people say. In November, Promoter A left a handwritten note for Stein Agee saying he’d been “cleaning up the books,” the charges state. About the same time, a video was uploaded to the Preserve Communities Vimeo account.

Fisher talks about his career while viewers see images of forests, mountains, and rivers, and of Fisher himself sitting on a deck, and then feeding a horse. “I hope the people who live in our communities gain a greater connection to nature, to slow down in life, to realize what’s really important,” he says. “We only have so many years here on the planet, and feeling good about what you’ve done with your life.”

— With assistance by Kaustuv Basu, Neil Weinberg, and Elise Young

By: David Voreacos

Source: Green Tax Break Syndicated Easements Face IRS Scrutiny – Bloomberg

.

Related Contents:

How Tax Cuts Affect the Economy

Claim Income Tax reliefs

How does the federal tax system affect low-income households

Allowance of deductions for personal exemptions

Real Gross Domestic Product

What is the Tax Cuts and Jobs Act

What did the American Taxpayer Relief Act of 2012 do

Corporate Top Tax Rate and Bracket

The limitations for business-related entertainment expenses are lifted off for 2021 taxes and beyond

Taxation of illegal activities in Australia and New Zealand

Tax amortization lives of intangible assets

Average tax refund slips to $2,913 in 2011

Possible Federal Tax Refund Due to the Earned Income Credit

Using your 2012 tax-year return to plan for the future

Paying your income tax by instalments

Federal government chooses direct deposit and prepaid cards over mailing checks

IRS Withholding Calculator

How To Claim Work Expenses On Your 2021 Taxes

The pandemic has turned many corporate employees into remote workers for the foreseeable future as well as driving layoffs and furloughs. People have had to navigate working from home — and the expenses that came with it if a workspace wasn’t already set up. For now, the most well-known employment-related tax deduction — for home office expenses — is reserved for those who are both self-employed and have a dedicated home space for working.

Read more: Tax return deadline 2021: How to estimate refund, claim stimulus money and more

“We know that there has been an increase in the number of people working from home due to the coronavirus,” Lisa Greene-Lewis, CPA, and tax expert with TurboTax said last year. “In general, only those who are self-employed can take deductions for expenses related to working from home.”

Still, there are a handful of other work-related expenses that both corporate employees and the self-employed may be eligible to claim on their taxes. And it’s worth noting that tax laws change from year to year — and it’s quite possible that the IRS will unveil a host of new tax deductions related to COVID-19, and its impact on remote working, some time between now and next April.

For now, here’s a list of the work expenses and deductions that you can presently claim.

Read more: Tax scams can still target you after you’ve filed your taxes. What to know and do

How to claim work expenses on your taxes: Choose a deduction

Before you start going through every line item of every receipt, you may want to save yourself the trouble and figure out which you’ll take: the standard deduction or the itemized deduction.

Standard deduction: The standard deduction is an all-encompassing flat rate, no questions asked. For tax year 2020, the flat rate is $12,400 for single filers and those married filing separately. The rate is $24,800 for married filing jointly. Taking this route is much easier than itemizing.

Itemized deduction: If you want to claim work expenses, medical payments, charitable contributions or other expenses, you’ll use the itemized deduction. It’s more time-consuming than the standardized deduction — and you’ll need proof of the expenses you wish to deduct.

If you’re going to claim and itemize your work expenses, you’ll need to complete Schedule A of Form 1040. You need to have sufficient proof for each itemized expense, which means tracking down receipts. If your standard deduction is greater than the sum of your itemized deductions, save yourself the trouble and take the flat-rate.

Common tax deductions to claim

Before you start adding up all the line-items, make sure you know what’s covered and what isn’t. Here are some of the most common deductions for folks working from home.

1. Home office deduction

Greene-Lewis says that although the home office deduction may be the largest deduction for self-employed people, many are hesitant to take it. The most significant requirement is that the space be reserved for and dedicated entirely to your work.

Read more: Why you can’t claim the home office tax deduction — even after working from home for a year

“Can you deduct a home office if you work at your kitchen table?” she says. “Unfortunately, no. You not only have to be self-employed — but have a dedicated space in your home that is exclusively related to your business. You can’t deduct the space at your kitchen table if your family also eats dinner there.”

If you have a dedicated workspace at home, you can use the IRS regular method or simplified option, though you can’t use a combination of them in a single tax year. Some things that qualify for home office deductions:

  • Insurance: You can deduct a percentage of your home insurance that covers the business space in your home.
  • Utilities: Expenses for utilities, like electricity and gas, can be deducted — but only the percentage used in your home office.
  • Depreciation: If you own your home, you can deduct the cost of wear and tear on the portion used exclusively for business.

All of these calculations are based on the percentage of your home that you use for business. To find the percentage, compare the size of space you use for business to that of your entire home, and then apply the percentage to the specific expenses. For instance, if your home is 1,800 square feet total, and your home office measures 300 square feet, your home office deductions could be applied at a rate of 16%.

Greene-Lewis says that if you take the simplified option, you can deduct $5 per square foot, up to 300 square feet, or $1,500 total. This would be an alternative to calculating the various individual home expenses.

2. Travel

Regular commutes from your home to work are considered non-deductible personal expenses. If you have to commute between multiple locations or travel for work, however, some of those costs may be deductible. Flights, hotel rooms, rental cars, meals and tips for service are all considered travel expenses. If a passport is required for your travel, you can claim that as well.

In the past, mileage accrued while driving your own car for business travel was an expense you could claim on your taxes — but the Tax Cuts and Jobs Act eliminated that for employees. The self-employed and business owners, however, are still eligible for this deduction.

Read more: Best tax software for 2020: TurboTax, H&R Block, Jackson Hewitt and more compared

3. Work uniform

If you have to buy clothes that you only wear for work, you can write off the cost. You can also claim expenses incurred for dry cleaning or laundering work clothes. The deduction cannot exceed 2% of your adjusted gross income.

4. Continuing education and certifications

In some fields, you can claim the enrollment cost of any required continuing education courses, classes or certifications. You can also deduct professional organization dues and fees — as long as the organization isn’t political. And if you’re a lawyer, you can deduct the price of membership for your state bar or any other similar organization.

If you’re a teacher, the Teacher Education Deduction lets you claim up to $250 of out-of-pocket costs related to teaching supplies. And Green-Lewis says if you and your partner are both teachers, you both can claim the deduction.

Read more: The truth about paying taxes on unemployment checks

5. Supplies

If you own your own business, you can deduct the cost of some business supplies. And the deduction threshold is generous.

“Self-employed business owners can deduct up to $1,020,000 for qualified business equipment like computers, printers and office furniture,” Greene-Lewis says.

Dori Zinn headshot

 

By:

 

Source: How to claim work expenses on your 2021 taxes – CNET

.

.

.

RELATED VIDEOS: “2021 TAX DEADLINES” – https://www.youtube.com/watch?v=dUy0q… “HOMEOWNER TAX ADVANTAGES” – https://youtu.be/s1C9FSvuOtk ***************** Say Hi on social: Join my Discord – https://discord.gg/aDN4GmWXHc Instagram – https://www.instagram.com/lenapetrovacpa Facebook – https://www.facebook.com/lenapetrovacpa *****************
WATCH THIS NEXT: “HOMEOWNER TAX DEDUCTIONS/ WRITEOFFS & TAX CREDITS” https://youtu.be/s1C9FSvuOtk “BEST TAX WRITE OFFS IN 2020” https://youtu.be/AiYqD3bUJfc “TAX ON SELLING A HOME” https://youtu.be/TRitJ7lsqas “HOW TO AVOID IRS TAX AUDIT? – RED FLAGS TO AVOID!” https://youtu.be/CSTaCwoJAH4 “IRS TAX LOOPHOLES THAT WILL SAVE YOU $$$” https://youtu.be/-Q3xPJuVz9w “HOME OFFICE TAX DEDUCTION” https://youtu.be/V1OXM-BkV30 “DAY TRADING TAXES” https://youtu.be/DiHIVXP8n3c “DO THIS TO INCREASE YOUR CREDIT SCORE IN 2020” https://youtu.be/bop8OrcjpvY “RISK FREE SHORT TERM INVESTMENTS – RECES SION PROOF” https://youtu.be/HA6kIOPjw_Q

Can We Claim Medical Expenses on Our Taxes

Extensive series of several doctors with various patients in a medical exam room.

Medical expenses can take a bite out of your budget, especially if you have unforeseen emergencies that are not fully covered by your insurance. The Internal Revenue Service allows taxpayers some relief, making some of these expenses partly tax-deductible. To take advantage of this tax deduction, you need to know what counts as a medical expense and how to claim the deduction.

Deduction value for medical expenses

In 2020, the IRS allows all taxpayers to deduct the total qualified unreimbursed medical care expenses for the year that exceeds 7.5% of their adjusted gross income.

Your adjusted gross income (AGI) is your taxable income minus any adjustments to income such as contributions to a traditional IRA and student loan interest.Your resource on tax filingTax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.Go Now

For example, if you have an adjusted gross income of $45,000 and $5,475 of medical expenses, you would multiply $45,000 by 0.1 (10 percent) to find that only expenses exceeding $4,500 can be deducted. This leaves you with a medical expense deduction of $975 (5,475 – 4,500).

Which medical expenses are deductible?

The IRS allows you to deduct preventative care, treatment, surgeries and dental and vision care as qualifying medical expenses. You can also deduct visits to psychologists and psychiatrists. Prescription medications and appliances such as glasses, contacts, false teeth and hearing aids are also deductible.

The IRS also lets you deduct the expenses that you pay to travel for medical care such as mileage on your car, bus fare and parking fees.

What’s not deductible?

Any medical expenses for which you are reimbursed, such as by your insurance or employer, cannot be deducted. In addition, the IRS generally disallows expenses for cosmetic procedures. You cannot deduct the cost of non-prescription drugs (except insulin) or other purchases for general health such as toothpaste, health club dues, vitamins or diet food, non-prescription nicotine products or medical expenses paid in a different year.

Claiming the medical expenses deduction

To claim the medical expenses deduction, you must itemize your deductions. Itemizing requires that you not take the standard deduction, so you should only claim the medical expenses deduction if your itemized deductions are greater than your standard deduction (TurboTax will do this calculation for you).

If you elect to itemize, you must use IRS Form 1040 to file your taxes and attach Schedule A.

  • On Schedule A, report the total medical expenses you paid during the year on line 1 and your adjusted gross income (from your Form 1040) on line 2.
  • Enter 7.5% of your adjusted gross income on line 3.
  • Enter the difference between your expenses and 7.5% of your adjusted gross income on line 4.
  • The resulting amount on line 4 will be subtracted from your adjusted gross income to reduce your taxable income for the year.
  • If this amount, plus any other itemized deductions you claim, is less than your standard deduction, you should not itemize.

Remember, TurboTax will ask you simple questions about your expenses, tell you which deductions you qualify for, and fill in all the right forms for you.

For more tax tips in 5 minutes or less, subscribe to the Turbo Tips podcast on Apple Podcasts, Spotify and iHeartRadio

Brought to you by TurboTax.com

More From TurboTax:

Stimulus 2020: Unemployment Insurance for Self-Employed IndividualsDue to the recent coronavirus pandemic, many businesses and individuals are facing challenging times — including those that are self-employed. The government has issued unemployment insurance for self-employed individuals to help them manage their finances.Read More

Brought to you byTurboTax.com

Great Ways to Get Charitable Tax DeductionsGenerally, when you give money to a charity, you can use the amount of that donation as an itemized deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.Read MoreBrought to you byTurboTax.com

Managing Your Retirement Account and Taxes During Economic UncertaintyIn times of economic uncertainty, you might start to notice some alarming changes to your retirement account. It’s usually unwise to panic and withdraw early, even if the temptation is strong.Read MoreBrought to you byTurboTax.com

Are Contributions to School District Programs Tax Deductible?The IRS allows you to claim a deduction for the donations you make to qualified organizations. These organizations include more than just charities and will include any school district program that does not operate for profit and is solely supported by state and local governments.Read MoreBrought to you byTurboTax.com

.

.

Debi Peverill

Subscribe to PFTGI: https://bit.ly/2Gxn731 Get More PFTGI: http://www.painlessfinancialtrainingg… Online Bookstore: https://www.painlessfinancialuniversi… Online Courses: http://www.painlessfinanciallearning…. Social: https://bit.ly/2EdgXPH Governance: http://www.basicboardgovernance.ca/